Mumbai, June 29: A few months ago, a cheque of Rs. 75,000 issued to a Mumbai businessman was repeatedly being returned and he instructed his lawyers to file a case under the Negotiable Instruments Act, 1882. But the businessman, J.P. Vaghani, a partner of J.P. Electronics, a giant consumer electronics distributor in north Mumbai, was aghast at the lawyer’s response. “You can no more file the cheque bouncing case in Borivali (suburb) under Section 138 of the Act. It must be filed and fought in Kurla, the location of the bank from where it was dishonoured,” advocate Mehul S. Shah advised.
This was the starting point of the untiring efforts of 69-year-old Vaghani over the past few months which resulted in a significant amendment to the Act, which got President Prab Mukherjee’s assent vide an ordince on June 15.
“Advocate Shah informed that the new rule was as per a Supreme Court order last year by Justice T.S. Thakur, Justice V. Sen and Justice C. gappan. They ordered that a case under Section 138 must be initiated at the place where the branch of the bank on which the cheque was drawn is located,” Vaghani told IANS.
The bench said: “In this alysis, we hold that the place, situs or venue of judicial inquiry and trial of the offence must logically be restricted to where the drawee bank is located.”
The judgement became applicable retrospectively - implying that hundreds of thousands of pending cases in various courts around the country would witness inter-state transfers. For Vaghani persolly, it meant every time he would have to rush from Borivali to the Kurla court for hearings, seriously affecting his persol and professiol life.
Moreover, the implications were enormous for the Indian economy, plagued with millions of dud cheque cases every year, he added. Undeterred, Vaghani decided to do something about it and, if possible, get the apex court verdict reversed, but was advised against filing a public suit. Instead, he started researching laws and constitutiol literature and various court judgements of dud cheque cases before grabbing the bull by the horns.
His son, Rajiv J. Vaghani, explained how his father has been a perpetual crusader for various public causes since four decades and never rests till he gets things set right. “I became aware of the legal complexities. On March 15, I wrote to the law minister of India, referring to last year’s judgement, which was tantamount to harassment of the complaints and benefited the accused who issued the dishonoured cheques,” Vaghani said.
“In such circumstances, if business takes place between Mumbai and Delhi and a Mumbai trader delivers material at Delhi and receives a cheque in Delhi which gets dishonored, then as per recent judgment, the Mumbai trader has to run to Delhi to file a case at the drawee bank’s jurisdiction for recovery and again as per the court, dates arise at his own cost leaving all his business at Mumbai,” Vaghani’s letter stated. He urged the minister to study the reasons behind the court order and initiate steps, including raising the issue in parliament, to revert to the origil practice which was operative and undisputed.
Vaghani’s plea apparently struck the right chord and on April 22, the union cabinet at a meeting chaired by Prime Minister rendra Modi, cleared the amendment to the Act clarifying the jurisdictiol issues for trying dud cheque cases. “The main amendment is the stipulation that the offence of rejection/return of cheque under Section 138 of Negotiable Instruments Act will be enquired into and tried only by a Court within whose local jurisdiction the bank branch of the payee, where the payee presents the cheque for payment, is situated,” the cabinet note said.
It added that this would increase the credibility of the cheque as a fincial instrument and help traders and commerce in general, allow lending institutions and banks to continue extending fince to the economy without worrying about loan default on account of cheque bouncing. This was not all. Owing to the complexities of passing it through the Lok Sabha and the Rajya Sabha, on June 10, the cabinet also decided to promulgate an Ordince to the effect.
The crucial Ordince was signed and promulgated by President Prab Mukherjee on June 15 - proving a huge victory for Vaghani’s efforts. “However, the government has to clarify the status of those cases which have been returned by the courts and the concerned complaint/s did not re-file them till now at the local jurisdiction of the drawee/accused’s bank,” Vaghani urged. Of course, the ordince would have to be approved by both houses of parliament within six months of being promulgated. (IANS)